M/s. Hari Steels & General Industries Ltd., New Delhi V. DCIT, New Delhi

ITA 6199/DEL/2014

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2907 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 13-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU MUKHARJEE
• Assessee Lawyers: SHAR AD AGARWAL; SHAHWAT BAJPAI
• Keywords: Reopening of assessment; Opportunity of being heard; Question of law; Difference of opinion; Competent authority; Assessment record; Block assessment; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 69C; 143(3); 142(1); 147; 148; 139

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH C, NEW DELHI BEFORE : SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 6199/DEL/2014 ASSESSMENT YEAR: 2005-06 HARI STEELS & GENERAL INDUSTRIES LTD., A-22, MOHAN CO-OPERATIVE INDUSTRIAL ESTATE, MAHURA ROAD, NEW DELHI. PAN- AAACH0858A (APPELLANT) VS. DCIT, CIRCLE 12(1), NEW DELHI. (RESPONDENT) APPELLANT BY SH. SHAHWAT BAJPAI, ADVOCATE & SH. SHARAD AGARWAL, ADVOCATE RESPONDENT BY SMT. RANU MUKHARJEE, SR. DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-XV, NEW DELHI DATED 30.09.2014 FOR THE ASSESSMENT YEAR 2005-06 ON THE FOLLOWING GROUNDS : 1. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THE ASSESSMENT AS VALID INSPITE OF THE FACT THAT HE HIMSELF, ON CALLING THE ASSESSMENT RECORDS FROM THE AO, HAS NOTED THAT NO NOTICE UNDER SECTION 143(2) WAS ISSUED AND SERVED TO THE A SSESSEE WHICH IS SINE QUA NON FOR MAKING ASSESSMENT UNDER SECTION 143(3) OF THE ACT. THEREFORE DATE OF HEARING 22.10.2018 DATE OF PRONOUNCEMENT 05.11 . 2018 ITA NO. 6199/DEL/2014 2 UPHOLDING THE ASSESSMENT PROCEEDINGS FOR WANT OF PR OPER ISSUE AND SERVICING OF NOTICE UNDER SECTION 143(3) IS INVALID AND ILLEGAL. 2. WITHOUT PREJUDICE TO THE GROUND NO. 1 ABOVE AND ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 3,82,55,045/- UPHOLDING THE ADDITIO N DONE BY THE SALES TAX AUTHORITIES WITHOUT ANY EVIDENCE IN HAND WITH THE C IT(A) AND IN VIEW OF THE FACT THAT THE APPELLATE AUTHORITIES IN VAT HAVE ALSO SET ASIDE THIS ADDITION WITH A DIRECTION FOR FRESH ASSESSMENT HAVI NG REGARD TO THE FACT THAT THE FACTORY PREMISES HAVE BEEN SEALED BY THE S ALES TAX AUTHORITIES AND THE ASSESSEE WAS LEFT NO OPTION TO PRODUCE THE EVIDENCE. 3. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE LD. AO HAS ERRED IN ENHANCING THE ADDITION MADE UNDER SECTION 69C OF THE ACT AMOUNTING TO RS. 62,89,918/- WITHOUT GIVING ANY NOTICE OF ENHANC EMENT AND OPPORTUNITY OF BEING HEARD AND TO PRESENT THE VERSI ON BEFORE HIM. APART FROM THE ABOVE GROUNDS OF APPEAL, THE APPELLA NT HAS ALSO SOUGHT PERMISSION TO RAISE FOLLOWING ADDITIONAL GROUNDS BY WAY OF APPLICATION DATED 18 TH JANUARY, 2018 : 1. THAT THE ASSESSMENT FRAMED U/S 143(3)/147 OF THE ACT IS WITHOUT JURISDICTION AND DESERVES TO BE QUASHED AS SUCH. 2. THAT BOTH THE INITIATION OF PROCEEDINGS AND THE ASSESSMENT FRAMED WITHOUT SATISFYING THE PRE-CONDITIONS FOR INVOKING THE PROVISIONS OF SECTION 148 OF THE ACT IS INVALID AND UNTENABLE. 3. THAT THE VERY BASIS OF REASSESSMENT, BEING THE I NFORMATION IN RE THE SALES TAX SEARCH AND SUBSEQUENT ASSESSMENT ORDER IN CASE OF THE ASSESSEE HAVE BEEN SET ASIDE BY THE HON'BLE DELHI HIGH COURT VIDE ORDER DATED 23.02.2007, MUCH PRIOR TO THE ISSUE OF SEC. 148 NOT ICE AND THUS THERE WAS NO REASON TO BELIEVE FOR REOPENING THE ASSESSMENT A FTER 4 YEARS, AND IS A MERE CHANGE OF OPINION . ITA NO. 6199/DEL/2014 3 2. IN ORDER TO ADMIT THESE ADDITIONAL GROUNDS, IT I S STATED ON BEHALF OF THE ASSESSEE THAT THESE GROUNDS ARE PURELY LEGAL IN NAT URE AND GO TO THE ROOT OF THE MATTER AND THEREFORE, THE SAME MAY BE ADMITTED IN V IEW OF DECISION OF HONBLE SUPREME COURT IN NATIONAL THERMAL POWER CORPORATION LIMITED VS. CIT, 229 ITR 383 (SC) AND CIT VS. VARAS INTERNATIONAL (P) LT D., 284 ITR 80 (SC), WHERE IT HAS BEEN HELD THAT THE QUESTION OF LAW OR THE GR OUNDS LEGAL IN NATURE CAN BE RAISED AT ANY STAGE OF PROCEEDINGS. THE LD. DR FAIL ED TO OFFER ANY PLAUSIBLE OBJECTION TO THE CONTENTION OF THE ASSESSEE. WE, TH EREFORE, CONSIDERING THE NATURE OF THESE ADDITIONAL GROUNDS, BEING LEGAL AND ADHERING TO THE AFORESAID DECISIONS OF HONBLE APEX COURT, ADMIT THESE GROUND S FOR CONSIDERATION. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E-COMPANY IS ENGAGED IN TRADING OF TOYOTA CARS AND THEIR SERVICING ETC. THE RETURN OF INCOME WAS FILED DECLARING INCOME OF RS.35,69,633/-. THE ASSESSMENT U/S 143(3) WAS COMPLETED AT INCOME OF RS.35,69,633/-. SUBSEQUENTLY , PROCEEDINGS U/S 147 OF THE I. T. ACT WERE INITIATED BY RECORDING REASONS O N THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTM ENT INFORMING THAT A SURVEY WAS CONDUCTED ON 11.5.2006 AT THE PREMISES O F ASSESSEE BY A TEAM OF ENFORCEMENT BRANCH OF THE DEPARTMENT OF TRADE & TAX ES, NEW DELHI WHERE IT WAS FOUND THAT THE ASSESSEE HAD SUPPRESSED ITS TURN OVER OF RS.21,16,38,052/- BY MAINTAINING DUPLICATE SET OF BOOKS, ACCORDING TO WHICH THE SALES AS PER HIGHER VALUE OF INVOICES WERE FOUND AT RS.1,72,09,8 6,183/- AND SALE AMOUNT AS PER BOOKS WAS SHOWN AT RS.1,50,93,48,131/-. BASED O N THE AFORESAID INFORMATION, THE ASSESSING OFFICER INITIATED PROCEE DINGS U/S. 147/148 AFTER RECORDING THE REASONS AND SEEKING NECESSARY APPROVA L FOR ISSUANCE OF NOTICE U/S. 148 FROM THE COMPETENT AUTHORITY. THE ASSESSEE FURNISHED DETAILED REPLY ITA NO. 6199/DEL/2014 4 BEFORE THE ASSESSING OFFICER, WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND MATERIAL AVAILABLE ON RECORD, MADE ADD ITION OF RS. RS.21,16,38,052/- AS SUPPRESSION OF SALES VIDE ORDE R DATED 28.03.2013. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A), WHERE HE CHALLENGED THE VALIDITY OF REOPENING OF ASSESSME NT ON VARIOUS LEGAL CONTENTIONS AS WELL AS MERITS OF ADDITION BY FILING DETAILED WRITTEN SUBMISSIONS AND RELYING ON VARIOUS DECISIONS. THE L D. CIT(A), HOWEVER, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND TH E ASSESSMENT ORDER ON VARIOUS ASPECTS, RESTRICTED THE ADDITION TO RS.3,82 ,55,045/- ON ACCOUNT OF SUPPRESSED SALES AND ALSO MADE ADDITION OF RS.62,89 ,918/- U/S. 69C ON ACCOUNT OF SUPPRESSED PURCHASES. AGGRIEVED, THE ASS ESSEE IS IN APPEAL BEFORE THE ITAT. 5. THE LD. AR OF THE ASSESSEE ASSAILED THE IMPUGNED ORDER ON VARIOUS LEGAL ASPECTS, WHICH ARE SUMMARIZED AS UNDER : (I). THE REASSESSMENT MADE WITHOUT SERVING ANY NOTI CE U/S. 143(2) OF THE IT ACT, IS INVALID UNDER LAW. (II). THE INITIATION OF PROCEEDINGS AND CONSEQUENTI AL ASSESSMENT WITHOUT SATISFYING THE PRE-CONDITIONS FOR INVOKING THE PROVISIONS OF SECTION 148, IS INVALID IN LAW. (III). REASONS RECORDED AND FORMATION OF BELIEF ARE BASED ON MERE SURVEY REPORT OF DELHI SALES TAX DEPARTMENT, AND TH E ACTION TAKEN BY SALES TAX DEPARTMENT ON THE BASIS OF SAME SURVEY ST OOD QUASHED BY ITA NO. 6199/DEL/2014 5 HIGHER AUTHORITIES OF SAID DEPARTMENT, MEANING THER EBY, THE INFORMATION WAS NOT COMPLETE TO FORM A BELIEF OF ESCAPEMENT OF INCOME. (III). THE INFORMATION WRONGLY TAKEN AS TANGIBLE MA TERIAL FOR FORMATION OF BELIEF OF ESCAPEMENT OF INCOME WITHOUT CONSIDERI NG THE OTHER RELATED INFORMATION, I.E., ORDER OF VTO BASED ON THE SAME I NFORMATION AND APPEAL ORDER OF SPECIAL COMMISSIONER II, WHICH WERE BROUGHT TO THE NOTICE OF ASSESSING OFFICER THAT THE ASSESSMENTS MA DE BY THE SALES TAX DEPARTMENT ON THE BASIS OF SAID SURVEY /INFORMATION STOOD QUASHED BY VARIOUS ORDERS OF THEIR HIGHER AUTHORITIES. 5.1 APART FROM THE ABOVE, THE LD. AR RELIED ON THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND VARIOUS DECISION CITED BE FORE THE LD. CIT(A). HE HAS ALSO FILED A SMALL PAPER BOOK OF 15 PAGES, INTER AL IA, CONTAINING THE REASONS RECORDED , ORDER OF HONBLE DELHI HIGH COURT DATED 23.02.2007 QUASHING THE EXPARTE ORDER OF VTO DATED 08.03.2006, ASSESSMENT O RDER OF VTO DATED 29.01.2008 BASED ON THE SURVEY OF THEIR ENFORCEMENT UNIT, ORDER OF SPECIAL COMMISSIONER-II, TRADE & TAXES (APPELLATE AUTHORITY ) DATED 30.12.2010, QUASHING THE ORDER OF VTO DATED 29.01.2008. THE PAP ER BOOK ALSO CONTAINED THE COPIES OF FOLLOWING DECISIONS RELIED BY THE LD. AR : (I). MOHINDER KUMAR CHHABRA VS. ITO, (2014) 48 TAXM ANN.COM 120 (DELHI-TRIB). (II). DIRECTOR OF INCOME-TAX (IT) VS. ATOMSTROYEXPO RT, (2018) 95 TAXMANN.COM 260 (SC) (III). DIRECTOR OF INCOME-TAX (IT) VS. ATOMSTROYEXP ORT, (2018) 95 TAXMANN.COM 260 (BOMBAY). ITA NO. 6199/DEL/2014 6 5.2 ON MERITS OF THE ADDITION, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE LD. AUTHORITIES BELOW HAVE FAILED TO CONSIDER T HE PLAUSIBLE EXPLANATION CLARIFYING THE MAINTENANCE OF DOUBLE INVOICES OF DI FFERENT AMOUNTS. 6. ON THE OTHER HAND, THE LD. DR RELIED UPON THE OR DER OF THE LD. CIT(A) AND SUBMITTED THAT THE FIRST APPELLATE AUTHORITY HAS MA DE AN ELABORATE DISCUSSION IN THE IMPUGNED ORDER ON EACH AND EVERY CONTENTION OF ASSESSEE AND HAS RIGHTLY SUSTAINED THE IMPUGNED ADDITIONS. SINCE THE ASSESSEE FAILED TO RECONCILE THE DIFFERENCE BETWEEN THE AMOUNTS SHOWN IN HIGHER VALUE INVOICES AND THAT DECLARED IN THE BOOKS OF ACCOUNT, THE ORDE R OF THE FIRST APPELLATE AUTHORITY DOES NOT CALL FOR ANY INTERFERENCE. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE S IDES AND HAVE GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. BE FORE WE CONSIDER THE LEGAL CONTENTIONS OF THE ASSESSEE, WE DEEM IT PROPER TO M ENTION HERE THE CHRONOLOGICAL SEQUENCE OF EVENTS IN THE INSTANT CAS E AS UNDER : 08.03.2006: AN EXPARTE ASSESSMENT WAS PASSED BY SAL ES TAX AUTHORITIES RAISING A DEMAND OF RS.4,74,56,058/-. 11.05.2006: A SURVEY WAS CONDUCTED BY ENFORCEMENT B RANCH OF TRADE & TAXES DEPTT. AT THE PREMISES OF THE ASSESSE E, WHERE IT WAS FOUND THAT THE ASSESSEE HAS SOLD 2187 CARS OF TOYOTA COMPANY INSTEAD OF 1872 CARS SHOWN TO HAVE BEEN SOLD BY THE ASSESSEE DURING THE YEAR. THE ENFORCEMENT DEPARTMENT ALSO FOUND THAT THE ASSESSEE HAS DEVELOPED A CDMI PROGRAM FOR INFLATION OF THE PRICE OF THE CARS. THE PREMISES WERE SEALED AND COMPUTER LAPTOP AND RELATED PAPERS WERE ALSO SEIZED BY THEM. ITA NO. 6199/DEL/2014 7 23.02.2007: WRIT PETITION OF THE ASSESSEE STOOD DIS POSED OF BY HONBLE DELHI HIGH COURT QUASHING THE EXPARTE ORDER DATED 08.03.2006. 29.01.2008: ASSESSMENT ORDER IN PURSUANCE TO SURVEY DATED 11.05.2006 WAS PASSED BY VAT OFFICER, CREATING A DEMAND OF RS.1,04,37,563/-. THE VTO FOUND THAT NUMBERS OF CARS SOLD BY THE ASSESSEE AS PER AUDITED BALANCE SHEET WERE FOUND 1872 AS SHOWN BY THE ASSESSEE. THE VTO, HOWEVER, HELD THAT THE DIFFERENC E BETWEEN THE PRICE OF CARS SOLD AND PRICE SHOWN REMAINS OF RS.3,82,55,045/- WHICH WAS TAXED UNDER THE DELHI SALES TAX ACT. 30.12.2010: THE ASSESSMENT ORDER DATED 29.01.2008 W AS SET ASIDE BY THE APPELLATE AUTHORITY(SPECIAL COMMISSIONER-II, TRADE & TAXES DEPTT.) AND REDUCED THE DIFFERENCE BY RS.2,73,14,588/- ON ACCOUNT OF CANCELLED AND DOUBLE INVOICES OF THE SAME CARS AND WORKED OUT THE TOTAL DIFFERENCE IN SALES OF RS.1,09,40,457/- AND THE MAT TER WAS REMITTED TO THE AO FOR MAKING FRESH ASSESSMENT ON THE BASIS OF ACTUAL MATERIAL/EVIDENCES, WHICH CO ULD NOT BE PRODUCED BY THE ASSESSEE DUE TO THE PREMISES , HAVING BEEN SEALED. THE ASSESSMENT IN PURSUANCE TO ABOVE ORDER IS STILL PENDING. 20.03.2012: NOTICE U/S. 148 WAS ISSUED ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING, GIVING THE DETAIL S OF SURVEY BY ENFORCEMENT BRANCH OF SALES TAX DEPTT. THE POSITION OF DEMAND/SUPPRESSION MADE BY AUTHORIT IES OF SALES TAX DEPTT. AS WELL AS REVENUE AUTHORITIES BELOW US, ON THE BAS IS OF SUBJECT SURVEY IS SUMMARIZED AS UNDER : SUPPRESSED SALE AS PER SURVEY TEAM : RS.21,16,38,0 52/- ITA NO. 6199/DEL/2014 8 SUPPRESSED SALE AS PER ORDER DATED 29.01.2008 : RS.3,82,55,045/- AS PER APPEAL ORDER OF SPCL. COMMISSIONER: RS.1,09, 40,457/- TRADE & TAXES DEPTT. SUPPRESSED SALES WORKED OUT BY ASSESSING OFFICER U/S. 147 : RS.21,16,38,052/- SUPPRESSION WORKED OUT BY LD. CIT(A) : (I). SALES : 3,82,55,045 (II). PURCHASE: 62,89,918 : RS.4,45,44,963/- 8. AN INSIGHT OVER THE ABOVE CHRONOLOGICAL EVENTS A ND POSITION OF DEMANDS/SUPPRESSION AT VARIOUS STAGES OF SALES TAX PROCEEDINGS AND INCOME- TAX PROCEEDINGS, AS NOTED ABOVE, GOES TO SHOW THAT ON THE BASIS OF SAME SURVEY REPORT VARIOUS AUTHORITIES HAVE TAKEN DIFFERENT STA NDS. THE IMPUGNED INFORMATION REGARDING SURVEY BY SALES TAX DEPARTMEN T HAS BEEN SOLELY USED BY THE ASSESSING OFFICER IN LETTER AND SPIRIT FOR F ORMATION OF BELIEF OF ESCAPEMENT OF INCOME WITHOUT MAKING ANY ENQUIRY OR APPLICATION OF MIND, PARTICULARLY WHEN SUBSEQUENT PROCEEDINGS BEFORE VAR IOUS AUTHORITIES OF SALES TAX DEPARTMENT WERE AVAILABLE BEFORE ISSUANCE OF NO TICE U/S. 148 AND WERE GOT ACKNOWLEDGED TO THE AO BEFORE PASSING THE REASS ESSMENT ORDER. IN PRESENCE OF THESE FACTS, THE REASONS RECORDED BY TH E AO CANNOT, IN ANY WAY, BE SAID TO BE PROPER TO FORM A BELIEF OF ESCAPEMENT OF INCOME, AS THE INFORMATION SO RECEIVED WAS NEITHER FOUND WELL FOUNDED NOR THE AO MADE ANY EFFORTS TO MAKE ANY VERIFICATION OR APPLICATION OF HIS MIND ON THE SAME. THE PROVISIONS OF SECTION 147 DO NOT GIVE UNFETTERED POWERS TO REO PEN THE ASSESSMENT AND ITA NO. 6199/DEL/2014 9 THE AO IS REQUIRED TO SATISFY THE PRE-CONDITIONS AS GIVEN IN THE SAID SECTION, WHICH IS LACKING IN THE PRESENT CASE. FOR THIS, THE RE ARE SEVERAL DECISIONS OF HONBLE COURTS, AS ALSO CITED BY THE ASSESSEE BEFOR E THE LD. CIT(A). IN VIEW OF THIS, THE REASSESSMENT U/S. 147 CANNOT BE SAID TO B E VALID. 9. ADVERTING TO THE NEXT LEGAL CONTENTION OF THE AS SESSEE REGARDING NON- ISSUANCE OF NOTICE U/S. 143(2) BEFORE PASSING THE R EASSESSMENT, A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT THE LD. CIT(A) THOUGH HAS CATEGORICALLY RECORDED THAT ISSUANCE OF NOTICE U/S. 143(2) IS SIN E QUA NON, WHICH WAS NOT ISSUED TO THE ASSESSEE IN THE INSTANT CASE, YET WE FIND THAT EVEN AFTER RECORDING SUCH A FINDING, THE LD. CIT(A) HAS NOT ADDRESSED ON THE VALIDITY OF RE- ASSESSMENT ON THIS SCORE, DESPITE FINDING THAT NO C OPY OF NOTICE U/S. 143(2) WAS FOUND IN ASSESSMENT RECORD NOR WAS THERE ANY EV IDENCE TO DISPATCH ANY SUCH NOTICE. THE LD. CIT(A), HOWEVER, WITHOUT DECID ING THIS LEGAL ISSUE CHALLENGING THE VALIDITY OF REOPENING PROCEEDINGS, IN OUR OPINION, HAS WRONGLY PROCEEDED TO SUSTAIN THE ADDITIONS. THE ASSESSMENT RECORD WAS CALLED FOR BY THIS BENCH VIDE ORDER SHEET ENTRY DATED 08.08.2018, BUT NO SUCH RECORD IS PLACED BY THE LD. DR BEFORE US TILL THE LAST DATE O F HEARING. IN SUPPORT OF HIS CONTENTION, THE LD. AR HAS RELIED ON THE DECISION O F DELHI TRIBUNAL IN THE CASE OF MOHINDER KUMAR CHHABRA (SUPRA), WHERE IT HAS BEE N HELD AS UNDER : 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. AFTER CONSID ERING THE ARGUMENTS OF BOTH THE SIDES AND THE FACTS OF THE CASE, WE FIND T HE CONTENTION OF THE LEARNED COUNSEL TO BE JUSTIFIED. THE ISSUE BEFORE TH E HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ASHOK CHADDHA (SUPRA) WAS WHETHER THE ISSUE OF NOTICE UNDER SECTION 143(2) IS NECESSARY WHEN THE N OTICE HAS BEEN SENT IN A SEARCH CASE UNDER SECTION 153A. HON'BLE JURISDICT IONAL HIGH COURT IN THE SAID CASE HELD AS UNDER:- ITA NO. 6199/DEL/2014 10 HELD, DISMISSING THE APPEAL, THAT (I) NO SPECIFIC NOTICE WAS REQUIRED UNDER SECTION 143(2) OF THE ACT WHEN THE NOTICE AS REQUIRED UNDER SECTION 153A(1)(A) OF THE ACT WAS ALREADY GIVEN. IN ADDITION, THE TWO QUESTIONNAIRES ISSUED TO THE ASSESSEE WERE SUFFICIE NT SO AS TO GIVE NOTICE TO THE ASSESSEE, ASKING HIM TO ATTEND THE OF FICE OF THE ASSESSING OFFICER IN PERSON OR THROUGH A REPRESENTA TIVE DULY AUTHORIZED IN WRITING OR PRODUCE OR CAUSE TO BE PRO DUCED AT THE GIVEN TIME ANY DOCUMENTS, ACCOUNTS, AND ANY OTHER E VIDENCE ON WHICH HE MAY RELY IN SUPPORT OF THE RETURN FILED BY HIM. 8. HOWEVER, IN THE CASE OF V.R. EDUCATIONAL TRUST (S UPRA), THE ISSUE BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT WAS IDENTICAL TO THE ISSUE IN THE PRESENT APPEAL BECAUSE THERE ALSO, THE DISPUTE WAS REGARD TO ISSUE OF NOTICE UNDER SECTION 143(2) WHERE THE ASSESSMENT WA S REOPENED UNDER SECTION 147/148. THE CONTENTION OF THE DEPARTMENT WA S THAT THE NOTICE HAD ALREADY BEEN ISSUED UNDER SECTION 142(1). HOWEV ER, HON'BLE JURISDICTIONAL HIGH COURT DID NOT AGREE WITH THE RE VENUES CONTENTION AND HELD AS UNDER:- EVEN OTHERWISE, IT IS DIFFICULT TO ACCEPT THE CONT ENTION OF THE APPELLANT THAT NOTICE UNDER SECTION 142(1) CAN BE R EGARDED AS A NOTICE ISSUED UNDER SECTION 143(2) OF THE ACT. THIS COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VERSUS LUNAR DIAMONDS LTD. [2008] 281 ITR 1 (DEL.) HAS HELD THAT SERVICE OF NOTICE UND ER SECTION 143(2) IS MANDATORY. IT IS NOT DISPUTED THAT IN RESPECT OF THE PROCEEDINGS UNDER SECTION 147 OF THE ACT, NOTICE UNDER SECTION 143(2) IS REQUIRED AND IS MANDATED EXCEPT IN CASES COVERED BY THE FIRS T AND SECOND PROVISO TO SECTION 148 OF THE ACT. THE PRESENT CASE IS NOT COVERED BY THE EXCEPTIONS CARVED OUT IN THE TWO PROVISOS AS TH E RETURN IN THE PRESENT CASE FILED ON OR AFTER 1 ST OCTOBER, 2005. IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME TAX AND ANOTHER VS. HOTEL BLUE MOON (2010) 321 ITR 362 (SC), THE SUPREME COURT HAD EXAMINED THE QUESTION OF MANDATE AND NECESSITY TO ISSUE NOTI CE UNDER SECTION 143(2) OF THE ACT, IN THE CASE OF BLOCK ASSESSMENT PROCEEDINGS AND IT WAS OBSERVED AS UNDER: THE OTHER IMPORTANT FEATURE THAT REQUIRES TO BE NOT ICED IS THAT SECTION 158-BC(B) SPECIFICALLY REFERS TO SOME OF THE PROVISIONS OF THE ACT WHICH REQUIRES TO BE FOLLOWED BY THE ITA NO. 6199/DEL/2014 11 ASSESSING OFFICER WHILE COMPLETING THE BLOCK ASSESS MENTS UNDER CHAPTER XIV-B OF THE ACT. THIS LEGISLATION IS BY INCORPORATION. THIS SECTION EVEN SPEAKS OF SUB-SECTI ONS WHICH ARE TO BE FOLLOWED BY THE ASSESSING OFFICER. HAD TH E INTENTION OF THE LEGISLATURE WAS TO EXCLUDE THE PROVISIONS OF CHAPTER XIV OF THE ACT, THE LEGISLATURE WOULD HAVE OR COULD HAV E INDICATED THAT ALSO. A READING OF THE PROVISION WOULD CLEARLY INDICATE, IN OUR OPINION, IF THE ASSESSING OFFICER, IF FOR ANY R EASON, REPUDIATES THE RETURN FILED BY THE ASSESSEE IN RESP ONSE TO NOTICE UNDER SECTION 158-BC(A), THE ASSESSING OFFIC ER MUST NECESSARILY ISSUE NOTICE UNDER SECTION 143(2) OF TH E ACT WITHIN THE TIME PRESCRIBED IN THE PROVISO TO SECTION 143(2 ) OF THE ACT. WHERE THE LEGISLATURE INTENDED TO EXCLUDE CERTAIN P ROVISIONS FROM THE AMBIT OF SECTION 158-BC(B) IT HAS DONE SO SPECIFICALLY. THUS, WHEN SECTION 158-BC(B) SPECIFICA LLY REFERS TO APPLICABILITY OF THE PROVISO THERETO CANNOT BE E XCLUDED. 24. WE MAY ALSO NOTICE HERE ITSELF THAT THE CLARIFICATI ON GIVEN BY CBDT IN ITS CIRCULAR NO.717 DATED 14-8-1995, HAS A B INDING EFFECT ON THE DEPARTMENT, BUT NOT ON THE COURT. THIS CIRCULAR CLARIFIES THE REQUIREMENT OF LAW IN RESPECT OF SERV ICE OF NOTICE UNDER SUB-SECTION (2) OF SECTION 143 OF THE ACT. AC CORDINGLY, WE CONCLUDE EVEN FOR THE PURPOSE OF CHAPTER XIV-B O F THE ACT, FOR THE DETERMINATION OF UNDISCLOSED INCOME FOR A B LOCK PERIOD UNDER THE PROVISIONS OF SECTION 158-BC, THE PROVISIONS OF SECTION 142 AND SUBSECTIONS (2) AND (3) OF SECTI ON 143 ARE APPLICABLE AND NO ASSESSMENT COULD BE MADE WITHOUT ISSUING NOTICE UNDER SECTION 143(2) OF THE ACT. (EMPHASIS S UPPLIED) THE AFORESAID REASONING WILL EQUALLY APPLY TO PROCEE DINGS INITIATED UNDER SECTION 147 OF THE ACT. 9. THAT EVEN IN THE CASE OF ALPINE ELECTRONICS ASIA PTE. LTD. (SUPRA) ALSO, THE HON'BLE JURISDICTIONAL HIGH COURT QUASHED THE A SSESSMENT PROCEEDINGS BECAUSE OF NON-ISSUE OF NOTICE UNDER SECTION 143(2) WITHIN TIME. IN THE SAID CASE ALSO, THE ASSESSMENT WAS REOPENED UNDER S ECTION 147/148. IN THE AFORESAID CASE, THEIR LORDSHIPS OF HON'BLE JURISDIC TIONAL HIGH COURT HELD AS UNDER:- ITA NO. 6199/DEL/2014 12 ADMITTEDLY THE PETITIONER HAD FILED RETURNS OF INC OME PURSUANT TO THE NOTICE UNDER SECTION 147/148 BY LETTER DATED NO VEMBER 19, 2009 ADOPTING ITS EARLIER RETURNS UNDER SECTION 139 (1) OF THE ACT AND THE NOTICE UNDER SECTION 143(2) WAS ISSUED ONLY ON NOVEMBER 23, 2010. THE FINAL ASSESSMENT ORDER HAD NOT BEEN PA SSED AND ONLY A DRAFT ASSESSMENT ORDER HAD BEEN PASSED. THE PROVISO TO SECTION 292BB WAS APPLICABLE. THE PRINCIPLE OF ESTOPPEL UNDE R SECTION 292BB WOULD THEREFORE, NOT APPLY. IN THESE CIRCUMST ANCES, THE ASSISTANT DIRECTOR COULD NOT RELY UPON THE MAIN SEC TION 292BB AND CLAIM THAT NOTICE UNDER SECTION 143(2) WAS DEEMED T O BE SERVED WITHIN THE STIPULATED TIME. IN VIEW OF THIS POSITIO N, THERE WAS NO REASON WHY REASSESSMENT PROCEEDINGS SHOULD CONTINUE AS NO NOTICE UNDER SECTION 143(2) OF THE ACT WAS SERVED ON THE A SSESSEE WITHIN THE STIPULATED TIME. THE ASSESSMENT PROCEEDINGS PURS UANT TO THE NOTICES UNDER SECTION 148 OF THE ACT WERE TO BE QUA SHED AND THE ASSISTANT DIRECTOR WAS TO ISSUE A NO OBJECTION CER TIFICATE TO THE PETITIONER AS REQUIRED BY THE RESERVE BANK OF INDIA . 10. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THA T ON THE FACTS OF THE ASSESSEES CASE, THE DECISION OF HON'BLE JURISDICTI ONAL HIGH COURT IN THE CASE OF ALPINE ELECTRONICS ASIA PTE. LTD. (SUPRA) A ND V.R. EDUCATIONAL TRUST (SUPRA) WOULD BE APPLICABLE. RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE ASSESSMENT COMPLETED WITHOUT ISSUE OF NOTICE UN DER SECTION 143(2) OF THE ACT WAS INVALID. THE SAME IS QUASHED AND CONSEQU ENTIALLY, THE ASSESSMENT ORDER PASSED IN PURSUANCE THERETO IS ALS O CANCELLED. 10. IN VIEW OF THE AFORESAID DECISION, IN OUR CONSI DERED OPINION, THE ISSUE OF NOTICE U/S. 143(2) IS MANDATORY IN THE REASSESSMENT PROCEEDINGS AND ITS FAILURE TO DO SO, MAKE THE RE-ASSESSMENT AS VOID. I T IS SO HELD ALSO BY HONBLE BOMBAY HIGH COURT IN CWT VS. HUF OF HH LATE SHRI J. M. SCINDIA (2008) 300 ITR 193 (BOM). SIMILAR VIEW HAS BEEN TAKEN BY HONB LE BOMBAY HIGH COURT IN ANOTHER CASE CIT VS. MUNDRA NANVATI (2009) 227 CTR 387 (BOM. HC). IN VIEW OF THIS, THE IMPUGNED RE-ASSESSMENT DESERVES TO BE HELD AS VOID. ITA NO. 6199/DEL/2014 13 11. KEEPING IN VIEW WHAT HAS BEEN DISCUSSED ABOVE, WE ARE NOT INCLINED TO SUPPORT THE ORDERS OF THE AUTHORITIES BELOW. SINCE THE REOPENING OF ASSESSMENT U/S. 147/148 ITSELF IS HELD INVALID ON L EGAL ASPECTS OF THIS CASE, WE DO NOT THINK IT NECESSARY TO ENTER INTO THE MERITS OF ADDITIONS, WHICH WILL BE ACADEMIC IN NATURE. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH NOVEMBER, 2018 SD/- SD/- (H.S. SIDHU) (L.P. SA HU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 5 TH NOVEMBER, 2018 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI